Mistake No. 2

The biggest mistakes I have made in real estate RJ Palano blogs about his failures“Never underestimate how much damage one person can do to you.”

A friend of mine uttered these words at a seminar about 10 years ago and I’m here to tell you there’s a lot of wisdom in those words. Think I’m kidding?
Close your eyes and sit quietly and think about some of the obstacles you’ve overcome in your personal life or business life. In some situations I bet you can trace your situation directly to one person.

I owned 350 houses in Buffalo

At one point in my life I was the largest owner of single-family houses in Buffalo, New York.

I personally or corporately owned 350 houses. As a result of being the largest owner of single-family houses in the lower-socio economic area, I was also the top target of political activists and self-serving politicians looking for headlines.

Hey, we’re talking about New York State here- the liberal, consumer-protectionist state that has some of the highest income taxes in the country as well as some of the biggest handouts to people who abuse the system.

Look, I’m a big believer in charity and I enjoy giving. I just didn’t enjoy giving to government by the force of a gun.

Here’s what happened

The biggest mistakes I have made in real estate investing by RJ PalanoAt one time, I had 143 tenants on Section 8 and in 43 of these properties, I had given the tenants an option to buy their home provided they paid a little bit extra each month and that amount went towards the purchase of their home.

Everything went smoothly until one day, one lady complained about the option. While this does not seem like a big deal, it became one.

Section 8 told me that my giving the tenants an option to purchase their home, and my collecting more money each month, was a scheme, a sham and a scam to defraud these people as they would never qualify to buy their home.

This was the beginning of the end of me in New York, and I was too blind to see it coming.
That one lady that made one phone call ended up costing me a small fortune. Attorney fees were over $100,000, and my corporation was fined $250,000. One person, one call, cost me $350,000 and one big piece of my life.

Looking back, though, it was a setback that turned into the most amazing comeback of my life, both personally and financially.

You never lose in life unless you quit. The roadside is littered with bodies of well-intending entrepreneurs and businesses they tried to create.
Never, and I mean never, lose sight of how much damage one person can do to you.

This article is written about one of my greatest mistakes in real estate, but here is another lesson as well: In every adversity is the seed for success if you persevere and are willing to continue to apply yourself.

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  • R J Palano

    RJ Palano is the acquisition director of BuyCashFlowProperties.com, a Tampa, Florida-based company that primarily provides turnkey houses for investors in the metropolitan Atlanta and Tampa Bay areas. His property management experience spans more than 35 years, and he has been involved in more than 3,000 real estate transactions in 12 states and more than 50 cities. Contact him at 813-495-3006 or rjp@buycashflowproperties.com.

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